What is e-RUPI? What Are Its Benefits, Use and How It Will Boost Financial Inclusion?

by Shatakshi Gupta

Prime Minister Narendra Modi launched e-voucher-based digital payment solution e–RUPI through video conferencing. Its aim is to promote digital payments. Through this, cashless and contactless payment will be done. According to the government, the new payment system will help in taking the benefits of the schemes to the targeted beneficiary. e-RUPI is a prepaid e-voucher, developed by National Payments Corporation of India (NPCI).

 On this occasion, PM Modi said that the country is reaching new dimensions of digital governance. This move of the government will help in transparent and leak proof delivery. This voucher system is already being used by many countries, for example America, Colombia, Chile, Sweden, Hong Kong etc. Let us understand this new system in detail.

What is e-RUPI?

It is a cashless and contactless method of digital payment. It is a quick response (QR) code or SMS string-based e-voucher, which is sent to the users’ mobiles. Users will be able to redeem this voucher without the need of a card, digital payment app or internet banking access.

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It connects the sponsors of the services with the beneficiaries and service providers in digital mode without any physical interface. The mechanism also ensures that payment is made to the service provider only after the transaction is completed.

The system is pre-paid in nature and hence assures timely payment to the service provider without any intermediary.

The one-time payment mechanism on its Unified Payments Interface (UPI) platform has been developed by the National Payments Corporation of India in collaboration with the Department of Financial Services, Ministry of Health and Family Welfare and the National Health Authority.

How different is this from digital currency?

e-RUPI, albeit backedby the Indian rupee as underlying asset, its purpose make it different from a ‘digital/virtual currency’ and place it closer to a voucher-based payment system.

How this will work?

Board of banks will be the issuing institutions. Any corporate or government agency will have to approach partner banks, which provide loans in both private and public sector, with details of specific persons and the purpose for which the payment is to be made.

Beneficiaries will be identified using their mobile number and the vouchers allotted to the service provider in the name of a given individual by the Bank will be issued to that individual only.

Its uses:

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  • This is expected to ensure leak-proof delivery of welfare services and can be used for maternal and child welfare schemes, medicines and nutritional assistance under schemes like Ayushman Bharat, Pradhan Mantri Jan ArogyaYojana, fertilizer subsidy etc. It can also be done for providing services under schemes for providing.
  • Even the private sector can avail these digital vouchers as part of its employee welfare and Corporate Social Responsibility (CSR) programmes.
  • In this one time payment service, users will be able to redeem vouchers without any card, digital payment app or internet banking.
  •  It will also ensure that payment is made to the service provider only after the transaction is completed.
  • Being prepaid, it makes payments to the service provider on time without any intermediary involved.

A step towards the adoption of digital currency:

The government is already working towards developing a central bank-controlled ‘digital currency’ and the launch of e-RUPI could potentially be critical to the success of future digital currency by highlighting gaps in the digital payment infrastructure.

According to the Reserve Bank of India (RBI), digital currencies are expected to outperform in India due to increased penetration of digital payments.

Moreover,the proliferation of private virtual currencies such as Bitcoin and Ethereum could be another reason for the popularity of the ‘central bank digital currency’.The central bank digital currency will be of great importance to the general public against volatile private virtual currencies.